Three-Time Recidivist Charged with Operating an Unregistered Broker-Dealer, Facilitating an Unregistered Securities Offering, and Defrauding Small Businesses
On March 1, 2018, the SEC issued a litigation release regarding Securities and Exchange Commission v. Steven J. Muehler, Claudia M. Muehler, Koorosh “Danny” Rahimi, AltaVista Capital Markets, LLC, AltaVista Private Client, LLC, and AltaVista Securities, LLC, No. 18-cv-01677 (C.D. Cal., filed February 28, 2018). According to the SEC’s litigation release:
Three-time recidivist Steven J. Muehler (“Muehler”) was charged with operating an unregistered broker-dealer, facilitating an unregistered securities offering, and defrauding small businesses, while promising to help them raise money from investors. Three companies under Muehler’s control, Muehler’s wife, Claudia M. Muehler, and his associate, Koorosh “Danny” Rahimi (“Rahimi”), were also charged. The SEC, since the scheme is ongoing, is seeking a preliminary injunction to stop Muehler’s ongoing violations of the securities laws, pending trial of the action.
According to the SEC’s complaint, Muehler’s companies are not registered as broker-dealers. Since at least November 2015, however, Muehler and his companies have agreed to provide broker-dealer services to more than 20 small businesses, including identifying and soliciting investors and utilizing a purportedly proprietary online securities exchange to help raise funds from investors. Muehler and his companies, in return, received fees, the right to a percentage of any funds raised from investors, and the right to an equity stake in each small business customer.
The SEC also alleges that in offering broker-dealer services, Muehler and his companies made numerous fraudulent claims to potential customers, including that Muehler and his companies had $50 million on-hand to invest in their customers’ securities, that they had previously helped customers raise millions of dollars, and that their proprietary online exchange was registered with the SEC. They also concealed that Muehler is subject to an SEC cease-and-desist order and has been sanctioned by California and Minnesota securities regulators.
The SEC’s complaint also charges Muehler with violating a cease-and-desist order issued by the SEC in 2016 barring Muehler from associating with any broker-dealer, and the SEC has filed a parallel action in the same court to enforce that SEC order.
The SEC’s complaint alleges that Claudia Muehler and Danny Rahimi helped Muehler carry out this scheme.
The SEC’s complaint, which seeks permanent injunctions, disgorgement plus interest, and penalties, charges Muehler and the three companies he controls (AltaVista Capital Markets, LLC, AltaVista Private Client, LLC, and AltaVista Securities, LLC) with violating Section 5(c) of the Securities Act of 1933 and Section 15(a), Section 10(b), and Rule 10b-5 of the Securities Exchange Act of 1934, and also charges Muehler with violating Section 15(b)(6) of the Securities Exchange Act of 1934. It charges Claudia Muehler with aiding and abetting Muehler’s and the AltaVista Companies’ violations of the Securities Exchange Act of 1934, and charges Rahimi with violating Section 15(a) of the Securities Exchange Act of 1934.